Staff at Little Havana Activities and Nutrition Centers of Dade County wore masks as a coronavirus precaution while they prepared lunch earlier this month for seniors at the Miami facility.

It’s a Thursday morning in San Francisco, the day after the World Health Organization declared the coronavirus a pandemic, and Ronald Silva hasn’t slept for days, “if not a week,” he says.

Silva is the president and CEO of private-equity firm Fillmore Capital Partners and chairman of the board of the nursing-home chain Golden Living Centers. He’s been up early calling his managers and nurses, he says, “cheering them on.” His facilities still don’t have COVID-19 testing kits, he says, but they have been screening vendors and staff for signs of infection. And the company is trying to boost nurses’ morale during the outbreak, he says, by having T-shirts made for them, emblazoned with the slogan “The Bitches Ride at Dawn.”

His nursing staff came up with the slogan, he says. “It might offend a couple people, but so what?”

About 70% of U.S. nursing homes are run for profit, and private-equity activity in the industry has jumped in recent years.

The fact that private-equity executives like Silva can play a pivotal role in nursing homes’ preparedness to fight the coronavirus-borne disease doesn’t sit well with some researchers and patient advocates. Many nursing homes are understaffed and ill-prepared to confront the pandemic because their owners have prioritized profits over patient care, patient advocates say. In particular, private-equity ownership of nursing homes across the U.S. has coincided with cost cutting, declining quality of care and increasing violations discovered in government inspections.

A COVID-19 outbreak at a Seattle-area nursing home has drawn nationwide scrutiny to these facilities’ ability to ward off the virus. For-profit ownership and private-equity backing of nursing homes, academic studies show, may weaken facilities’ staffing levels and compliance with federal standards — two factors that researchers say will be critical in nursing homes’ fight against the disease.

Private-equity buyouts of nursing homes are linked with higher patient-to-nurse ratios, lower-quality care, declines in patient health outcomes and weaker performance on inspections, according to new research from the University of Pennsylvania’s Wharton School, New York University’s Stern School of Business and the University of Chicago Booth School of Business.

Overstretched staff members who make simple missteps such as failing to wash their hands or to wear appropriate protective equipment can endanger everyone in a facility. “All it takes is one staff member ignoring standard precautions to expose everybody in a nursing home to dangerous infections,” says Michael Connors, an advocate at California Advocates for Nursing Home Reform.

For vulnerable nursing-home residents, COVID-19 is ‘like pulling the pin on a hand grenade and rolling it into a small room.’

Ronald Silva, Fillmore Capital Partners

“We’re a pretty misunderstood sector,” Fillmore’s Silva says. “The majority of people we care for are indigent people, and that’s something our society doesn’t talk a lot about.” For vulnerable nursing-home residents, COVID-19 is “like pulling the pin on a hand grenade and rolling it into a small room,” he says. But “we’re very good at infection control,” he adds. “We don’t let people in who are sniffling.”

Findings in the new working paper — which examined 2000-to-2017 data on roughly 18,500 nursing homes, including nearly 1,700 that were acquired at some point during that period by private-equity firms — are similar to those in previously published studies. At large for-profit chains in the labor-intensive industry, strictly controlling nursing-home staffing costs is key to generating profits, says Charlene Harrington, a University of California San Francisco School of Nursing professor who has conducted multiple studies of nursing-home ownership. “When you have private-equity investors in these large companies, that can make it even worse, because there’s such tremendous pressure to get high profits,” she says.

Dr. David Gifford, chief medical officer at the nursing-home industry group American Health Care Association, said in a statement that, in academic studies, “many of the private-equity facilities had excellent staffing and ratings, and many of the facilities without private equity had poor staffing.” A number of factors contribute to quality of care, he said, “including staff training, health outcomes and customer satisfaction.”

About 70% of U.S. nursing homes are run for profit, and private-equity activity in the industry has jumped in recent years. Since the start of 2015, there have been nearly 190 private-equity deals in the nursing-home industry totaling about $5.3 billion, up from 116 deals totaling just over $1 billion in the 2010-to-2014 period, according to PitchBook.

Along with the academic studies, allegations by facility residents highlight issues with staffing and quality of care in private-equity-owned chains. Nursing-home operator Beverly Enterprises was acquired by Fillmore in 2006, and the chain’s name was later changed to Golden Living. In 2016, a former resident of Golden LivingCenter–Hy-Pana in Stockton, Calif., sued the facility, claiming its failure to provide adequate care caused her to develop a severe pressure ulcer that became infected with MRSA and led to multiple hospitalizations. The nursing home’s owners had sought to maximize profits “by underfunding and understaffing the facility,” the complaint alleged. The facility denied all of the allegations, and the case was settled last year, according to court records.

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